Teva Shares Up on Mylan-Pfizer Merger

A logo for Pfizer is displayed on a monitor on the floor at the New York Stock Exchange, Monday. (Reuters/Brendan McDermid)

Teva Pharmaceutical Industries registered a big boost in its share price on Monday as a result of the merger of generic drug producers Mylan and Pfizer, according to Globes.

Mylan’s share price was up 13 percent on Wall Street, and Teva’s rose 3.5 percent on expectations of further consolidation in the industry.

The new deal—merging Mylan with Pfizer’s off-patent division Upjohn—will create the world’s largest generic drug company, projected to report $19-20 billion in pro forma revenue, $7.5-8 billion in EBITDA, and $4 billion in cash flow in 2020.

Teva, meanwhile, is anticipating $17 billion in revenue and 28 percent EBITDA in 2020, compared with $19-20 billion in revenue and 40 percent EBITDA for the new company.

Teva’s leverage is substantially higher than the leverage target published by Pfizer and Mylan today. The two companies are also expected to achieve synergy and cost savings amounting to $1 billion by 2023, said Globes.

Pfizer shareholders will hold 57 percent of the company and Mylan’s shareholders will hold the other 43 percent. The boards of directors of Pfizer and Mylan have approved the deal.

Reactions to the news was not entirely positive, however. BTIG managing director and analyst Timothy Chiang wrote that a deal of this kind will energize the generic drug sector.

But Cowen analyst Ken Cacciatore, said that “combining two things that are bad for each other will not solve the structural problems.”

The newborn pharmaceutical giant has yet to be named.

To Read The Full Story

Are you already a subscriber?
Click to log in!